John Charman will be able to work in Bermuda for reinsurer Axis Specialty, despite having to comply with Ace International's employment restrictions.
The former group president and chief executive of Ace had been dismissed by the company on 17 March following "differences over personnel matters".
Under the contract terms, Charman was to spend a year on gardening leave.
But he intended to oversee the run-off of Lloyd's insurer Newmarket. He had also been appointed chief executive of Axis Specialty, Marsh & McLennan's new $1bn (£700m) insurance and reinsurance operation based in Bermuda.
On 1 October, Ace filed a writ to prevent Charman from working for a competitor. The following month, the Royal Court of Justice in London threw out his attempt to oppose an interlocutory injunction.
A five-day hearing was scheduled for last week but an out of court settlement was made.
Axis Specialty chief financial officer Andrew Cook said: "John will be underwriting in Bermuda and he can honour his contract under terms of settlement."
An Ace spokesperson said: "The litigation has now been settled on agreed terms and the court has made an order accordingly.
"Ace is pleased to note Charman has given undertakings to the court reflecting the terms of his contract. Charman confirms that, as he has always said, he will comply with the terms of the covenants."
Chief financial officer Andrew Cook said: "Our website is live and we are binding business now.
"We are staffed up and have our catastrophe modelling in place."Axis Specialty currently has three underwriters, an actuary and two assistants.